Stocks experienced a downward trajectory in Tuesday trading while Bitcoin, the largest cryptocurrency by market capitalization, remained stagnant, trading near $27,200. The ongoing crypto regulatory issues and macroeconomic uncertainties, such as the recent US debt ceiling stalemate, have contributed to this range-bound behavior. While the sideways movement is noted as better than the downward trend experienced in 2022, it gives a feeling of stagnation in the crypto markets, according to Tim Frost, CEO of digital wealth platform Yield App.
The current situation has cryptocurrencies circling in different directions, with active traders and crypto enthusiasts being the main participants in the market. The stagnation is further evident as the market’s capitalization of approximately $1.3 trillion sees little progress from a year ago. Moreover, an imminent catalyst that could shift the market in either direction has yet to emerge. Nevertheless, the global macro picture appears more positive, with inflation rates falling in the US and potentially in the UK and the EU in upcoming months.
Meanwhile, the April Consumer Price Index recently fell below 5% annually, for the first time since early 2021, albeit still far from the 2% target set by the US central bank. Other major cryptocurrencies, including Ether, have remained within their two-week range, while APT and SOL, the native cryptos for the Solana and Aptos smart contract platforms, experienced a modest increase in value.
As debt limit anxieties grip the market, traditional stocks have taken a hit, with the technology-focused Nasdaq Composite, the S&P 500, and Dow Jones Industrial Average declining. In contrast, crypto markets witnessed a slight boost following news of the European Commission expressing a more moderate stance on cryptocurrency, as per a leaked document reviewed by CoinDesk. This move could potentially make it easier for commercial lenders to hold stablecoins and tokenized assets.
Strahinja Savic, head of data & analytics at Canada-based FRNT Financial, mentioned that the correlation between the S&P 500 and Bitcoin has been decreasing since April, currently standing at -0.23. This break highlights potential decoupling between Bitcoin and traditional assets, which could be further explored as macro catalysts such as the debt ceiling debate and Fed rate policy come to the fore.
Lastly, Savic pointed out an interesting development: the proportion of Bitcoin’s total supply remaining unmoved for over a year has reached a record 62.13%. This reflects the unwavering commitment of Bitcoin ‘hodlers’ to the asset amid the current stalemate in the market.
Source: Coindesk
